The vaccine bonds initiative has been hailed by world leaders as “a catalytic success story and one that is constantly attracting new members”. An official G8 report from the May 2012 meeting at Camp David describes the IFFIm as part of a “game changing” effort for global immunisation.

Efforts to slash rates of preventable illnesses and to make a final push for the eradication of polio have built momentum in recent years, yet global financial instability threatens to derail progress in a number of areas.

Funding for these immunisation drives comes in part from wealthy philanthropists – many of whom have seen their wealth diminished by collapses of the value of shares and property in the Western world.

But it’s the contribution of governments that is facing most strain. Fiscal austerity in Europe and spending cuts in the US mean foreign aid budgets are under pressure, prompting some commentators to ask whether the ‘good times’ in global health are coming to an end.

Cost of credit downgrades

That’s the obvious, direct impact of the financial crisis on development aid. More subtle is the impact of decisions made by credit ratings agencies to downgrade the debt of European governments. Vaccine bonds have been a huge hit with the markets and have injected millions of euros into the global health effort but they have not been immune (pardon the pun) to the vagaries of financial markets.

The IFFIm was downgraded by Standard & Poor’s in January 2012. Having previously been AAA-rated (implying that it is the safest form of investment), it was reduced by one notch to AA+ with a warning that more downgrades could follow.

This is still a pretty ‘safe’ investment but it means that the IFFIm has to pay higher interest rates when it sells bonds, effectively making it more expensive to raise money. That translates into less money being available to spend on vaccine programmes.

Why the downgrade?

The IFFIm is supported by guarantees from the UK, France, Italy, Norway, Australia, Spain, The Netherlands, Sweden and South Africa. France guarantees one quarter of the IFFIm’s debt so when French government debt was downgraded in early January it was almost inevitable that the IFFIm would come under the spotlight.

The UK, the biggest supporter of the fund, is also on a ‘negative outlook’ suggesting a downgrade could be announced if the economic situation worsens, while Italy and Spain have also been repeatedly downgraded over the past year. In short, if the people guaranteeing your debt are seen as less creditworthy than in the past, you will see your creditworthiness fall too.

When discussing the impact of the financial crisis on health services in European countries we might also spare a thought for those in the developing world who depend for their survival on foreign aid and investment in vaccine bonds.

Who knows, maybe the true cost of failure to tackle the Eurozone will be defeat in the global war on polio. The disease is endemic in just a handful of countries and there have been no new cases in Europe for 10 years. Let’s hope progress is not about to be thrown off course.

This is an abridged version of an article originally posted on the Vaccines Today blog